Thursday, October 02, 2014

For the
first time in the history of the International Centre for Settlement of
Investment Disputes (ICSID), on March 20, 2014, a proposal to disqualify an
arbitrator was accepted by the two unchallenged arbitrators. The tribunal in
Caratube v. Kazakhstan upheld a proposal for disqualification of fellow
arbitrator Mr. Bruno Boesch. Together with two similar decisions by the Chairman
of the ICSID Administrative Council, also reviewed in this Insight,
this case suggests a notable change in the assessment of proposals challenging
arbitrators under the ICSID Convention. The grounds to challenge
arbitrators are generally similar among different arbitration rules, and they
pertain to an alleged lack of independence or impartiality. However, ICSID rules
for challenging arbitrators are unusual for two main reasons. First,
procedurally, the decision on a challenge is first taken by the unchallenged
members of the arbitral tribunal. The more common procedure of requesting a
third party to take a decision is adopted only when a sole arbitrator or a
majority of the arbitral tribunal is challenged. In that case, challenges to
ICSID arbitrators are decided by the Chairman of the ICSID Administrative
Tribunal, who is also the President of the World Bank. Second, Article 57 of the
ICSID Convention provides that a party may propose the disqualification of an
arbitrator "on account of any fact indicating a manifest lack of the qualities"
of impartiality or independence. This threshold to evaluate the grounds for a
challenge has been criticized as too strict and difficult to meet. More common,
lower thresholds allow for a challenge to arbitrators in circumstances that give
rise to "justifiable doubts" as to the impartiality or independence of an
arbitrator.